TOC (theory of constraints)

Thomas Felipe Ro
Mind Map by Thomas Felipe Ro, updated more than 1 year ago
Thomas Felipe Ro
Created by Thomas Felipe Ro about 6 years ago
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Short explanation about the TOC applied in some organizations

Resource summary

TOC (theory of constraints)
  1. The theory of constraints (TOC) is a systems-management philosophy developed by Eliyahu M. Goldratt in the early 1980s.v
    1. STATEMENT ON MANAGEMENT ACCOUNTING
      1. comprehend the underlying principles of TOC
        1. understand the various elements of TOC man- agement systems
          1. design a throughput accounting system
            1. broaden employee awareness and obtain their buy-in for TOC management systems
            2. PRINCIPAL KEYS FOR UNDERLYING TOC
              1. Processes/organizations as chains
                1. the weakest links can be found and strengthened
                2. Cause and effect
                  1. All systems operate in an environment of cause and effect
                3. TOC management systems
                  1. Logistics/scheduling.
                    1. Performance measurement.
                      1. Built around the core metrics of throughput, inventory, and operating expense
                      2. Problem-solving/thinking process.
                        1. Project management.
                          1. TOC’s critical chain concept removes the implicit assumption of infinite capacity from the project management domain
                          2. Market segmentation
                            1. TOC offers important insights to all managers, and especially to cost managers, in the areas of product mix and prod- uct pricing decisions
                          3. USES AND BENEFITS
                            1. decreased production lead times
                              1. improved quality of products and services
                                1. dramatic increases in profitability
                                  1. reduced inventory levels
                                    1. reduced bottlenecks
                                      1. facilitation of strategic marketing and opera- tional decisions
                                        1. application of continuous improvement at the supply chain level
                                        2. The Five-Step Focusing Process
                                          1. Step 1. Identify the system’s constraints.
                                            1. Step 2. Decide how to exploit the constraint
                                              1. Step 3. Subordinate everything else to the above decisions
                                                1. Step 4. Elevate the constraint(s). Add capacity or otherwise change the status of the original resources
                                                  1. G Step 5. Return to step 1. Don’t let inertia become the new constraint
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